group buying deals: are they good for your biz?

so this morning i opened up my email to find one from a group buying site. normally i delete them without even opening because i never want the thing they are offering. and i can’t figure out how to unsubscribe from the bloody thing, but that is another rant for another day.

today the daily deal was:

$19 for a $490 photography package.

needless to say, as the owner of a photography biz, that caught my attention rather quickly. i feel really frustrated when i see any business offering something so far below market value, especially when that business is in my field. urgh!

so i have been silently analyzing this whole group buying thing in my head all day, and finally decided to write a post on it to see what others think.

i have a few problems with this deal specifically…

1. it is not specific

this deal says the family gets a ‘personalized photo session and a DVD slide show of the best images to enjoy’ – it does not say how long the session is or anything about how it is ‘personalized’ and it doesn’t say how many images will be on the DVD or if they are low resolution (for viewing on a screen) or high resolution (for printing). basically, i have no idea what you really get.

2. it is not transparent

i had a look at the website to see what the prices are for prints, which is generally the way they suck you in. offer you a deal on something (the session) and then charge you to the hilt for what you really want (the prints). no prices are listed on the site. so in addition to my question about the cost of prints i also wonder where the “$490 value” comes from.

3. it doesn’t instill confidence

as of this moment 238 people have signed up for this deal with 2 days to go. as a photographer i do not see how those sessions could possibly be personalized, how the images could be hand edited with care, or even how they could all be done by skilled professional photographer. i picture this being done like a cattle call with trained minions pushing click as each family files through!

but after being annoyed all day i am just going to let it slide. in the end this business is not really my competitor, i don’t really want the sort of client who only wants to pay $19 for my time, talent and expertise and i know the service i provide is nothing like what i am imagining this to be like. i am going to just keep on being awesome.

but i still have questions about group buying in general.

what could a business get out of doing a deal such as this?

traffic

clearly it works to get traffic through your doors. but are these really the clients you want? ones who are just buying something from you because it is on offer at 96% off? are those your ideal clients?

maybe if you were using group buying as a way to get some extra traffic to fill up a slow period, or to sell off some unwanted stock… but i wouldn’t bet on those people becoming repeat customers, or passing your name on to people who are ideal clients.

exposure

i guess if you have 238 new customers in one day, that would probably mean a much larger number have looked at your website, or will now recognize your business name.

but again, if those people are all just people looking for a deal, are they going to come back to your site again? or just grab the next deal that the next biz offers?

money

perhaps the goal is that once you get the people in the door, they will spend more at your business and you will make a profit at the end.

but what if they don’t? what if all of those people only want that deal? what if you potentially harm your brand & image for no profit?

in the end, my major concern for these types of deals is what is the long term effect on your brand? yes, your price is part of your brand. by offering something at such a huge discount you may be giving the following message:

  • your product or service does not have the value (quality, expertise, detail etc.) you say it does
  • your product or service is ‘cheap’
  • your business or brand is untrustworthy (suspicion often follows an extreme deal)
  • teaching your customers to wait for the next deal before making another purchase

like any other promotional offer, i am sure there are ways to do group buying deals well. there is a time and a place for offering people a discount. i would just warn businesses to be cautious: you should have a purpose in mind and be careful that you are doing it in a way to maximize the return and maintain your brand message.

what do you think about these types of promotions? would they work for your biz? how do you feel when your competitors do them? have you ever bought one for yourself?

here is some further reading on group buying. have a read and let me know what you think, i’d love to hear from you!